Japanese Stocks Plunge On US, Europe Worries

Japanese stock markets plunged Tuesday as weaker-than-expected US manufacturing data and news that confirmed Spain has fallen into a double-dip recession weighed on the sentiment.

Data released Monday raised concerned about the strength of economic recovery in the world's largest economy. The Chicago purchasing managers' index, a gauge of business activity in the Midwest, declined to a 29-month low in April. Chicago PMI fell to 56.2 in April from 62.2 in March and also trailing analysts' median estimation of 60.5.

Japanese benchmark Nikkei 225 plunged 1.78 percent or 169.94 points to 9,350.95. Export companies' shares struggled as the yen strengthened to below 80 level per dollar Monday, the strongest level since February, amid signs of a slowing US economy.

The rise of the yen comes as a shock, particularly in light of last week's Bank of Japan easing. Although none of this is attributable to Japan, the BOJ is in an increasingly difficult position to do anything about it, Wall Street Journal quoted Nicholas Smith, equity strategist at CLSA, as saying.

Meanwhile, concerns over Spain's financial condition also added to the down side. Spain's recession was confirmed Monday after official data from the National Statistics Institute showed that Europe's fifth largest economy shrank 0.3 percent in the first three months of this year. On annual basis, the contraction was measured at 0.4 percent. However, the figures were slightly better than what had been forecast.

Markets in China, India, Singapore and South Korea were closed on account of May Day.